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Fat Tax Has a Fat Chance of Success



Far greater number of people visit unregulated eateries than a McDonald’s or KFC in Kerala, writes S Sanandakumar

Two weeks ago, the latest salvo in thefight against fat was fired in of all places — Kerala. The government of Kerala — the land of seafood and the eponymous beef fry —announced in the budget a 14.5% “fat tax” on burger, pizza, tacos, doughnuts, sandwich, pasta, bread fillings and other cooked foods served in branded restaurants. The tax will be levied in fast-food chains such as McDonald’s, Burger King, Pizza Hut and KFC.

Kerala became the first state in India to impose such a tax, but it is the last place where one would expect such a move. Sure, a fund-starved government expects to collect a revenue of ?10 crore a year from the fat tax. But isn’t Kerala the superstar of social and health indicators? And since when did Malayalis become less obsessed with fish molly and beefroast and turn to chicken snackers and Mexican cheesy fries?

The answer to the first question is easy. Kerala has great health indicators – Infant Mortality Rate at 12 and Maternal Mortality Rate at 66 com-pared with national average of 40 and 178- but its population has been gorging on unhealthy food. Kerala has the second highest rate of obesity in India and the new tax was a preventive measure, finance minister Thomas Isaac said after announcing the fat tax.

Dr Jothydev Kesavadev, chairman ofJothydev’s Diabetes Research Center, says there is an alarm-ing increase in the incidence of lifestyle-related diseases like diabetics and heart attacks in Kerala. “The age of onset of obesity in the state has come down from 55-60 years to 25-30 years,” he says. Though Kerala has achieved an increase in longevity, the quality of life has of late deteriorated, according to him.

Change in Lifestyle

According to him, Kerala’s transition from a tra-ditional lifestyle to a modern one was quite fast, faster than even the US. The emphasis on manual labour in the traditional lifestyle gave way to a sedentary lifestyle. The state’s population start-ed ageing fast (life expectancy at birth increased from 38 in 1960 to 77 in 2016), as prosperity levels rose due to a surge in remittances from the Gulf.

Dr Mary George, a former member of the pub-lic expenditure review committee, says a recent family health survey revealed that Kerala has the largest number of obese children in India. “Health specialists have told me that 40% of the pregnancies in the state are aborted due to life-style problems like obesity,” she says, adding that for these reasons, she welcomed the ‘fat tax’.

There are no easy answers to the second ques-tion about whether Kerala has taken a fancy for burgers and fries. In recent years, a number of quick service restaurant chains such as KFC and McDonald’s have sprouted in Kerala. There are two reasons for this — the influx of tourists and migrant workers as well as the age-old dem-onstration effect. “Eating out is fast spreading probably because of the demonstration effect of non-resident Keralites who come back from Gulf countries, the US and the UK,” says Dr George.

G Jayapal, general secretary, Kerala Hotel and Restaurant Association, says eating out has seen a phenomenal increase in Kerala, almost by 10 % every year. He attributes this to the growing income of the people and the increase in the working population.

That doesn’t mean Malayalis have forsaken the food they have been eating all their life. Only, they are eating out far more than anytime in their lives. Hundreds of fast-food restaurants serving seafood and beef dishes — many of them also serve north Indian cuisine — have mushroomed across the highways and interior roads running through Kerala. In contrast, a QSR chain like McDonald’s has only seven outlets in Kerala.

The people of Kerala frequent these local res-taurants more than QSR brands like KFCs and Dominos Pizza. Customers of the branded chains are largely the affluent, migrants or tourists. Many of the local restaurants operate as shacks and are largely unregulated.

That means the government could be barking up the wrong tree, according to some experts. They say the government can achieve its objective only if it brings the small restaurants and shops sell-ing local fattening food as well under the tax net. “Strict labelling of the products with the ingredi-ents and their fat content clearly mentioned would help to reduce consumption,” says Dr Kesavadev. But the finance bill now says the tax will apply to burgers, pizza, tacos’ doughnuts, sandwiches, burger-pattys, pasta, bread-filling and other cooked food items sold by restaurants having a brand name or trademark registered under the Trade Marks Act, 1999.

Wrong Target?

PM Sankaran, president, Kerala Bakers Association, says the sale ofthe items mentioned in the budget through bakeries is only around 2 % of total sales. He says traditional fattening food and snacks should not be brought under the tax net because their consumption — at least through bakeries — is less than that of the branded fast food.

“We will publish a study next month compar-ing the fat content of the foods served in the branded restaurants and the food that we sell,” he says. “We welcome the tax. But the finance

Finance Minister Thomas Isaac, who is a fierce advocate of organic farming, has said the real objective of the fat tax was to discourage the undesirable trends in changing food habits that leads to lifestyle diseases

minister should not call it a fat tax. Instead, he should say that it is a tax on the costly food served in the branded restaurant frequented by the upper class.”

The Confederation of Indian Industries (CII) has asked the government to review the tax. Last week, ET reported that the National Restaurant Association of India plans to seek legal recourse if the government levies the fat tax.

For his part, Isaac has said the real objective of the tax was to discourage the undesirable trends in changing food habit that leads to lifestyle dis-eases. In fact, Isaac started popularising the organic cultivation of vegetables in his constituency several years ago. The marketing of the surplus that the villagers produce has been fetching them a good amount of extra revenue.

Isaac said by introducing the new tax he hoped to start a debate on the unhealthy food habits of the people. Questions like why there is no tax on porotta or beef shows that the real objective has been achieved, he said.


Source: Economic Times

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